California Puts a Date on Climate Disclosure
California’s climate disclosure regime is now moving into implementation. One statute is enjoined, while the other is progressing through an initial regulation that sets fees and a first reporting deadline. This is where things stand after CARB’s February 2026 decision.
California’s climate disclosure statutes set timelines and require implementing rules for corporate emissions and climate-related financial risk disclosures. On 26 February 2026, the California Air Resources Board (CARB) adopted an initial regulation that sets administration and implementation fees, defines key thresholds, and fixes the first reporting deadline under SB 253. It turns statutory duties into a compliance calendar for large businesses operating in California; SB 261 enforcement remains enjoined pending appeal.
From Statute to Calendar
CARB adopted the “California Greenhouse Gas Reporting and Climate Financial Risk Disclosure Initial Regulation” after a public hearing. The regulation is codified in Title 17 as “Article 6: California Climate Disclosures” and was developed to satisfy SB 253 and SB 261, as amended by SB 219.
Its scope is narrow. It establishes the framework for programme administration and implementation cost recovery fees under Health and Safety Code sections 38532 and 38533 and sets the first corporate GHG reporting deadline under Health and Safety Code section 38532.
The August 2026 deadline is intended as a clear backstop for first-year reporting. CARB’s notice is explicit that it does not set other programme requirements, including reporting and assurance requirements and enforcement provisions, which are expected through subsequent rulemaking.
Two Laws, Two Enforcement Postures
Enforcement posture diverges by statute and by court order. For SB 253, CARB signals enforcement discretion for good-faith first-year submissions, and the Ninth Circuit denied an injunction pending appeal as to enforcement of SB 253.
For SB 261, the Ninth Circuit granted an injunction pending appeal. CARB states it will not enforce Health and Safety Code section 38533 against covered entities for missing the statutory 1 January 2026 deadline and that reporting is voluntary while the court order remains in effect. CARB will provide further information, including an alternate reporting date, as appropriate once the appeal is resolved, and indicates a voluntary reporting docket for entities that choose to publish in the interim.
Who is in Scope, and When
SB 253 applies to “reporting entities”: specified business entities with total annual revenues over $1 billion that do business in California. Applicability is determined based on the reporting entity’s revenue for the prior fiscal year. SB 253 requires annual disclosure of Scope 1 and Scope 2 emissions starting in 2026 on a date set by the state board, and Scope 3 emissions starting in 2027 on a schedule specified by the state board.
SB 261 applies to “covered entities”: specified business entities with total annual revenues over $500 million that do business in California, excluding entities regulated by the Department of Insurance or in the business of insurance in any other state. Applicability is determined based on the business entity’s revenue for the prior fiscal year. SB 261 requires a climate-related financial risk report on or before 1 January 2026 and biennially thereafter, published on the entity’s own website, subject to the current injunction.
The initial regulation defines “revenue” as gross receipts under California Revenue and Taxation Code section 25120(f)(2) and ties “doing business in California” to Revenue and Taxation Code section 23101. For programme application and fee assessment under the regulation, a reporting entity’s or covered entity’s revenue amount is determined by the lesser of the entity’s two previous fiscal years of revenue.
Several categories fall outside the regulation entirely, including tax-exempt non-profit and charitable organisations, certain insurance-related entities, federal, state and local government entities and majority-owned government entities, entities engaged solely in wholesale electricity activity in California, and entities whose only California activity is payroll or employee compensation including teleworking employees.
The first SB 253 Scope 1 and Scope 2 emissions report must be submitted on or before 10 August 2026. CARB states the first year will cover Scope 1 and Scope 2 only. The applicable preceding fiscal year depends on whether an entity’s fiscal year ends on or before 1 February, with an option for some entities to use their most recent preceding fiscal year where that data is available. The hearing notice links 10 August to the verification deadline under CARB’s Mandatory Reporting Regulation (MRR) programme.
The Regulatory Context
CARB frames the regulation as providing the funding necessary to administer the statutory programmes and to deliver accurate, comparable, decision-useful information to California investors, lenders, insurers, and consumers.
The staff report supports a flat-rate fee structure as a way to streamline implementation and improve cost predictability. For reporting teams, the practical shift is that an SB 253 filing date and an annual fee cycle now sit alongside statutory emissions and climate-risk duties.
Operationalising the Requirements
Scope determination is the first decision point and needs an evidence file. Reporting teams will need a documented view of whether the organisation is an SB 253 reporting entity, an SB 261 covered entity, or both, using the regulation’s gross-receipts definition, “doing business” test, and revenue approach for programme application. The regulation requires entities to maintain records demonstrating that they meet the revenue and “doing business in California” thresholds, retain those records for five years, and provide them to CARB if requested.
Next is fiscal-year logic. Organisations will need to determine which dataset is the “applicable preceding fiscal year” for the first Scope 1 and Scope 2 submission and whether the optional most-recent-preceding-fiscal-year route is available. That choice affects what data must be assembled and how evidence boundaries are described.
Assurance and disclosure mechanics form a third channel. SB 253 requires third-party assurance, with limited assurance over Scope 1 and Scope 2 beginning in 2026 and reasonable assurance from 2030; detailed requirements are expected through later rulemaking. SB 253 also directs that emissions reporting should minimise duplication and allows reporting entities to submit reports prepared to meet other national and international reporting requirements, including reports required by the federal government, provided those reports satisfy the section.
Fees run in parallel and connect directly to the scope file. The regulation establishes administration and implementation cost recovery fees. It requires a fee determination notice on or before 10 September each year from fiscal year 2026. Payment is due within 60 days, with late fees for untimely payment. It also provides for auditing of fee remittances, including using California Franchise Tax Board data.
For SB 261, CARB’s enforcement posture creates an interim period where reporting is voluntary while enforcement is paused. If an organisation chooses to publish voluntarily, SB 261 sets the disclosure architecture: climate-related financial risk in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations (or a successor) or an equivalent reporting requirement, and measures adopted to reduce and adapt to those risks. If a covered entity cannot complete all required disclosures, SB 261 requires it to provide the recommended disclosures to the best of its ability, explain reporting gaps in detail, and describe steps it will take to prepare complete disclosures.
Standards Alignment
SB 253 anchors emissions measurement and reporting to Greenhouse Gas Protocol standards and guidance and instructs CARB to minimise duplication, including by allowing submission of reports prepared for other reporting requirements where they satisfy the statute.
SB 261 anchors climate-risk disclosure to the TCFD Final Report recommendations (or a successor) and also recognises equivalent routes, including the International Financial Reporting Standards Sustainability Disclosure Standards issued by the International Sustainability Standards Board.
The Horizon
The 10 August 2026 deadline for first-year Scope 1 and Scope 2 reporting is the nearest fixed point, and the fee cycle that precedes it is already defined. What follows is more demanding: Scope 3 reporting begins in 2027, and reasonable assurance over Scope 1 and Scope 2 emissions data is required from 2030.
For SB 261, the appeal controls the timeline. CARB states an alternate reporting date will follow once litigation is resolved, alongside its voluntary docket.
Subsequent rulemaking will determine the detailed shape of broader reporting, assurance, and enforcement provisions. Public rulemaking processes and comment windows will be the channel for organisations to feed practical issues into that design, alongside meeting the August deadline.
